Washington, D.C. — The Consumer Financial Protection Bureau, or CFPB, issued a new report today that reveals that servicing failures are widespread for student loan borrowers who have either federal loans, private loans, or both. According to the CFPB, consumers describe companies using a wide range of sloppy, patchwork practices that can create obstacles to repayment, raise costs, cause distress, and contribute to driving struggling borrowers to default. In conjunction with the report, the U.S. Treasury, the U.S. Department of Education, and the CFPB also announced a joint statement of principles on student loan servicing. Ben Miller, CAP Senior Director for Postsecondary Education, issued the following statement:
For too long, student loan servicing has been the Wild West for borrowers with little hope of consistency, accuracy, or accountability. The joint principles on student loan servicing announced today are a good first step, but the CFPB should move quickly to write rules that ensure student borrowers are protected from shoddy servicing practices.
Rohit Chopra, CAP Senior Fellow, added:
A wrongful student loan default can devastate a young person’s financial future, making it harder to land a job or one day buy a home. When student loan servicers slip up and cut corners to protect their profits, this isn’t just bad for borrowers, it’s bad for all of us.
For more information or to speak with an expert, contact Allison Preiss at email@example.com or 202.478.6331.